Frikkee takes cautious stance to maintain dividend stability

It has been a turbulent year for UK equity income fund managers, with BP suspending its payments, large-cap miners reinstating dividends and investors looking to the mid-cap space for income opportunities.

Tineke Frikkee, the manager of Newton Higher Income fund, managed to grow the portfolio’s distribution by 3.5% over the year to 30 June, despite a difficult environment for income seekers. Its 12-month historic dividend yield to 30 June was 7.84%, and the group expects the fund to deliver 3% dividend growth up to summer 2011. The yield on the FTSE All Share has fallen from it latest peak of 5.9% in October 2008 to its latest low of 2.9% on 9 November 2010, yet the fund’s yield remained stable, declining from 7.5% to 7% over the same period. How did you achieve this? The dividend ...